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the world is still spinning March 19, 2008

Posted by youppe in business, finance, politics.
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convert your cash into gold, right now.

another classic ‘rearview-mirror’ situation. people are lost in the euphoria of GE 2008 and the ensuing post-election drama, that they forget to look around and realize that the world is still spinning. the Malaysian election didn’t change a thing about the world, and the looming crisis is now growing even larger. it is high-time in Malaysia, and most people would not notice – in the midst of all the post-election news – about the spectacular collapse of Bear Stearns, one of the world’s largest and strongest investment bank. as you read this, a JPMorgan-led, government-backed bailout of the venerable bank has probably been concluded. the swift, last-gasp buyout initiated by the US Federal Reserve was aimed at saving the bank from bankruptcy, as the total collapse of such a huge institution would certainly bear significant effect to the spreading confidence crisis of the global financial system.

the US subprime crisis has claimed huge losses at financial giants such as Citigroup, Northern Rock, UBS, Credit Suisse, Wachovia, etc., but the magnitude of this stunning reversal of fortune at Bear has got people screaming ‘RECESSION’ louder than ever. the idea has been toiling with us since the start of the subprime woes, but this latest ‘scalp’ – a highly-respected one – is seen as a huge sign of the dark days to come. the US economy is inching ever closer towards implosion, dragging the global financial system along with it. yep, unfortunately, instead of what the mainstream media (read: irrelevant) would like you to believe pre-election, the fall in US economy will absolutely affect everyone, including us, in no uncertain terms. especially in the commodities market, which is highly dependent on the greenbacks of USD. the disputes over oil rights in Venezuela (President Hugo Chavez vs ExxonMobil), Russia (Putin vs ExxonMobil, Shell & TOTAL in the huge Sakhalin development), and in many other parts of the world would just amount to nothing if the oil market crashes in the back of a falling USD. even the ‘IRAQ Oil Bonanza’, whereby the war-torn country is opening up its massive oil & gas reserves for foreign investments for the first time, would not be as good as it initially looked. (oh, in case you don’t know – the opening up of Iraqi Oil to foreign companies is only possible since the WAR toppled Saddam Hussein and the new US-friendly puppet government was established. the foreign companies at the forefront to grab the oil? ExxonMobil and Chevron, two significant corporate contributors for Mr Bush’s electoral campaign. i know you guessed it).

i am particularly quite jittery about my company’s (the company that i worked in) position in all of this mess. as an insider, i don’t believe the company will fall due to political reason, because the company already has a strong foundation and is well-run by able professionals. 80% of the revenue were generated from overseas operation, after all. yep, roughly 20%, only, came from Malaysia. the group’s cash cow – the oilfield services division – which is predominatly run by mat sallehs and expats except for the local KL branch, has an established global presence at 65 locations in 36 countries, and the top contributors to the company’s coffers were the Americas (Venezuela, Mexico & US), Europe (Russia, Norway & UK) and the Gulf. but that is actually the Achilles’ heel – international operations were all done in USD. the group’s net profit for FY07 was cut down in the millions due to translation loss from a weakening USD during last year. if the US enters into recession and the USD is more heavily depreciated,… (but then again, as we all basically depend on the US economy and pegging the USD, everyone else would suffer the same fate)

my advice? be weary of your investments, be it in commodities (oil, CPO, gold, etc..) or the stock market (local or foreign). this is not a good time to hold up some shares, people. tell your unit trust agents to hold off for a moment. it is still not a foregone conclusion, and we still might just avoid it, or won’t be affected much by it. but just be weary. with all the happenings in the world, didn’t your mama tell you just that?

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sometimes, we experience a ‘moment‘ that we wish would last forever. but the beauty of ‘moment‘, is that it is fleeting, and just slips through our fingers. so cherish the ‘moment‘ while it lasts, because as you stand awe-inspired, the world still revolves around you. and time, as they say, waits for no man.

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Comments»

1. The Banker - March 19, 2008

my company are also largely unaffected since our american operation is negligible when compared to the rest of the group. lega.

investments-wise, there’s two sides of the coin. u can be very cautious and hold back in anticipation of further slides. or start buying now and utilise dollar cost averaging to spread your risk. the market is low, no better time to buy than now 😉

i say, do it smartly. don’t suddenly spend all ur savings and start buying stocks just because it’s cheap. it could slide further and u’ll be in deep shit. unless u hv very reliable knowledge of the markets, do not speculate. take the long term route, the risk will be a lot less imho.

begitulah 5 sen aku.

2. youppe - March 19, 2008

talking like The Banker, as he is. ehehe.. yep bro, the trick is to know the market from reliable sources. if u know what’s going down and whats going up, it won’t be a problem.

i actually lost some money, and made some during this election season. (yeah i know whats going down bcos of election for sure.. ahahaha)


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